Finastra Develops An Open Platform For Banking Apps

Finastra, the global fintech company, has launched a cloud-based platform that will allow financial firms to develop apps with minimum coding and offer a marketplace for them to collaborate with banks.

Called FusionFabric.cloud, it is a Platform as a Service (PaaS), an open innovative platform that will change the way banks develop and deploy software, said Natalie Gammon, chief cloud officer at Finastra.

Finastra's open banking platform will help small banks compete.Photo by Tom Groenfeldt

Ninety percent of bank innovations come from outside the organization, she added, and they face competition for customer loyalty from companies like Mint and Monzo which aggregate financial information and offer it to customers in one place.

The risk for banks is that their customers will establish their primary financial relationship with the aggregators rather than with brick and mortar banks.

“On the other side we deal with a lot of fintechs which have the innovation, but similar problems — they are struggling to find a way to connect with financial institutions. Some are startups and don’t have the capital or sales presence required to deal globally, or even to get through the long arduous procurement process needed for a large bank.”

Banks and consultancies have launched incubators and partnership programs to bring together technology firms and banks, helping tech firms meet the appropriate decision makers while learning what banks need in terms of financial stability and security from suppliers. Accenture, which is a partner with Finastra in the open banking platform, has sponsored fintech innovation labs in New York, London and Hong Kong.

For a fintech firm, just finding the right person to talk to in a money center bank can take 12 to 18 months; the innovation labs and bank incubators seek to match technologists with the right department in a bank to reduce the lag time.

Gammon said that on the bank side, it can take 10 months to two years to bring an innovation to market.

To speed development, Finastra also provides FusionCreator, a low-code environment where 60 early adopters were able to create innovative apps in just a few days, a 10x improvement over traditional development, Gammon said.

Although Finastra offers its software for installation on-premise, it is increasingly using the Microsoft Azure cloud for its software and for its open banking program, including FusionOperate and FusionStore, an online marketplace where banks can search for apps and fintechs can market their software.

Other banking technology firms have developed similar programs. Temenos, for example, has its app MarketPlace which “provides Temenos customers with access to Temenos certified business apps that are fully integrated with the latest release of the Temenos platform,” according to its web site.

The Temenos MarketPlace includes products for security, anti-fraud, user experience and analytics.

Finastra’s marketplace is much broader than what other tech vendors offer, Gammon said.

“What’s different about our offering is that while competitors have talked about APIs, they have opened very narrow APIs for specific business lines. What we are doing is opening up our entire core architecture on the platform across our entire product suite, and we will release APIs across all our portfolio. We focus on retail and corporate banking where the demand comes from.”

Finastra’s initial API focus is on payments and retail banking to serve the immediate demand of PSD2 and open banking coming into force. Other APIs will be added in due course to cover the whole Finastra line of products and solutions.

“They have dozens of pre-built conversation flows to check balances and to make transfers and authorize payments.”

The advantage for banks is that it allows them to accelerate their innovation cycle and optimize costs while improving customer experience.

On both the banking and technology sides of the market, Finastra's platform helps small and mid-size firms compete with the giants. The open banking platform helps smaller banks and credit unions to be unlock innovation cost-effectively while also helping smaller startups that don’t have have the capital to compete with big technology players.

“We’ve seen a lot of excitement in the fintech space,” Gammon added. “Smaller startups that don’t have the capital to compete can develop much more quickly at much lower expense and have greater sales reach. People have talked about platformification but no one has really owned the standard before. We want to be the number one provider of a platform for open innovation.”

Finastra is riding currents of changed thinking about cloud computing within financial services.

Gammon said financial firms have had a wake-up call over costs and time to deploy.

“A few years ago were having very different chats. People were afraid of cloud, they thought they could do it on their own, they saw no need to collaborate. They had big buy or build budgets, and they could justify multi-year multi-million projects. Now they are under so much pressure —to retain those end customer relationships.”

She still has conversations over issues of cloud, especially compliance and security, she said.

“One reason we have partnered so strongly with Microsoft is because they have the strongest compliance in the industry., and Microsoft understands the importance of security.” Already Finastra has 4,000 customers on Azure, she said, and "the majority of our go-forward platforms are on Azure.

“We chose to partner with Microsoft because of their global footprint, and they truly understood financial services and they have global reach,” she said. “I don’t think anyone is not having conversations about cloud, although they may be having conversations saying they are not quite ready.”

Banks in the U.S. as well are starting to understand if they are not innovative and can’t compete they are going to lose out.

Beyond FIs and fintechs, Finastra has been getting interest from a third group — academics who want to teach their students the development skills to to build apps for the financial industry. They see that partnering with Finastra will be good for their curriculum.

“University College London has students building out apps for pricing and capital markets,” she said.

Finastra was formed by Vista Equity Partners, a private equity firm, through the merger of Misys and D+H. Both of them had in turn had acquired several other fintech companies over the years, including Opics, Loan-IQ and Sophis on the Misys side and Harland Financial Solutions and Fundtech at D+H.

I like the pace of technology, especially in finance where it can move so fast. I'm on Jay Palter's list of fintech influencers to follow in 2018, although it takes a bit of scrolling: http://jaypalter.ca/2018/01/2018-fintech-influencers. In addition to Forbes I write for t...